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Canadians who like to shop across the border will now be able to bring back far more items duty and tax-free as a result of the federal government significantly lifting the exemption limit.

But Finance Minister Jim Flaherty's decision to quadruple the exemption limits for travellers returning to Canada from brief trips will add just one more hurdle to Canadian retailers who already face a competitive disadvantage because of import duties, Diane Brisebois, the president and CEO of the Retail Council, said Thursday.

Starting June 1, returning travellers who have been outside of Canada for more than 24 hours but less than 48 will be able to bring back $200 worth of tax-exempt goods. That's up from $50. For those out of Canada for 48 hours or more, the exemption is also increasing from $400 to $800.

The exemption for more than seven days only rises by $50 to $800. Limits for alcohol and tobacco remain unchanged.

The changes reflect Canada's attempt to harmonize its long-unchanged exemption rates with the U.S. Canadians annually make more than 30 million overnight visits to the U.S.

Immigration Minister Jason Kenney (Calgary Southeast) told The Vancouver Sun the low exemption limits have stifled Canadians' desire to shop across the border, and raising the ceiling will simply reduce their tax burden.

"(The existing exemption rates are) a long-standing irritant for most Canadians, particularly the 90 per cent who live fairly close to the U.S. border, and we think consumer choice is a good thing, and this just basically means lower taxes, in the form of duties, for consumers," he said.

But Brisebois said the increased ceiling only heaps more trouble on the country's struggling retail sector.

"We always said that if the government was considering any change to the exemption limits at the border, it had to be done in conjunction with the elimination of import duties that retailers must pay in Canada," said Brisebois, whose organization represents more than 43,000 of Canada's small, medium and large retailers.

Finance Minister Jim Flaherty nodded to that sentiment in his budget, announcing he will undertake a comprehensive review of the country's preferential tariff system. Brisebois said that gives her hope that an unfair duty system will soon come to an end.

"I think this minister does appreciate that retailers in Canada don't have a level playing field and while he is trying to respond to consumers complaining about wanting to shop across the border, there is also a lot of pressure from the retail community in Canada," she said.

Canadian retailers pay upwards of 18 per cent more in import duties than their American counterparts, particularly for products manufactured in Asia, Brisebois said. Those duties, which she called "useless tariffs", only help to propel more people who live close to the border to dip into the U.S. to save the difference.

The increased exemption limits will also have a negative effect on the government's bottom line. Flaherty estimates federal tax revenues will decline by $13 million in 2012-13 and by $17 million in 2013-14.

Canadian border guards already give lots of discretion to returning travellers and do not routinely enforce the country's exemption limits, Brisebois said, so she can understand why the Conservative government felt it politically wise to increase the limit. But that can't come at the expense of Canada's retail sector, which generates far more tax revenue for Ottawa.

"They weren't collecting the duty before, which we were concerned about. We understood from a political perspective that they did not want to upset the constituency," Brisebois said. "But we've made it very clear that the retail industry is not going to be thrown under the bus."

The Canadian Federation of Independent Business doesn't think its members will "be lighting their hair on fire" over the increased limits, but the government does need to pay attention to import duties that hurt Canadian retailers.

"While most small businesses will not be lighting their hair on fire about the changes to the cross border shopping limits, some retailers closer to the border are worried that they will be negatively affected," said Laura Jones, CFIB vice-president, British Columbia. "It makes sense for government to take actions such as reviewing and eliminating import duties to make Canadian retail more competitive. "

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